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October 14, 2006

 

FASB and SEC Mull U.S. Exec Pay Accounting Change

FASB and SEC Mull U.S. Exec Pay Accounting Change

America's accounting chiefs are close to deciding that salary and perks exceeding two million dollars annually can not rationally be deemed pay for work expended. Payouts of five million to hundreds of millions would quite boggle the minds of both Adam Smith and Karl Marx, said one insider, "off, off, off the record."
Going forward, the recommendation will be that executive remuneration exceeding two mil annually will be construed as a disbursement of corporate capital in amounts agreed to by boards, directors, trustees and not so trust-ees as the case may be.
The new accounting Pronouncement will reflect that mega salaries in excess of the maximum two mil will be considered as an allocation of corporate capital which will no longer qualify for accounting treatment as a corporate expense.
A number of CEO's have formed a study committee particularly in response to the IRS position of "You can call it capital or you can call it Swiss cheese, we're still taxing exec' pay at the highest personal rate possible."
"There's a fundamental lack of fairness here," whinged the corporate CEO's. They also pointed out, "even embezzlement is treated as a deductible expense."
Sharehoders, mostly wearing Abu Ghraib style hooding to protect their identities, were cautiously pessimistic.

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